Oil hits highest in a year on growth hopes, OPEC+ cuts

LONDON: Oil hit its highest in a year on Friday (Feb 5), closing in on US$60 a barrel, supported by economic revival hopes and supply curbs by producer group OPEC and its allies.

New orders for US-made goods rose more than expected in December, pointing to continued strength in manufacturing. President Joe Biden's drive to enact a US$1.9 trillion coronavirus aid bill also gained momentum on Friday.

Brent crude was up 85 cents, or 1.4 per cent, at US$59.69 by 1438 GMT after hitting its highest since Feb 20 last year at US$59.79. US crude was up US$1.02, or 1.8 per cent, at US$57.25, after reaching US$57.28, its highest since Jan 22 last year.

"The conditions still remain supportive for oil markets," said Jeffrey Halley, an analyst at brokerage OANDA. "Oil should find plenty of willing buyers on any material dip."

Brent is on track to rise more than 6 per cent this week. The last time it traded at US$60 a barrel, the pandemic had yet to take hold, economies were open and people were free to travel, meaning demand for gasoline, diesel and jet fuel was much higher.

The rollout of COVID-19 vaccines, however, is fuelling hopes of lockdowns being eased, boosting fuel demand. But even demand optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels until 2022.

Oil also gained support from supply curbs by producers. OPEC and its allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped to lift prices from historic lows last year.

"OPEC+ discipline has been a real positive," said Michael McCarthy, chief market strategist at CMC Markets.

Further boosting the market, a weekly supply report showed a drop in US crude inventories to their lowest since March, suggesting that output cuts by OPEC+ producers are having the desired effect.